As promised, and even ahead of schedule, HMRC have now published a paper setting out their legal position on Mutuality of Obligation (MOO). 
Following the announcement in the Autumn Statement of a consultation into Private Sector IR35 reforms, the industry has been flooded with news on the subject. 
With the Public Sector reforms introduced little over a year ago, we are seeing the effects. Impact has been noted particularly in the NHS and you can read more about this with a simple Google search – trust me, there is plenty to read. With talk of blanket assessments and concerns for contractors being pushed into the hands of offshore contractor schemes, we are all following the consultation carefully. 
With many IR35 and Employment Status cases reaching the courts in the past few months, all-in-all it has been quite a year for IR35. We have seen wins for contractors and HMRC alike and I think everyone is really beginning to see how much of a grey area IR35 is and how unworkable. 
Each case looks at the contract and working practices of the contractor. Some of the key indicators are:- 
- Supervision, Direction and Control 
- Business-like Working 
- Part and Parcel 
And, most controversially, Mutuality of Obligation (MOO). 
Case law very much supports the view that MOO does not always exist in a contract for services and has upheld cases where absence of MOO has been used as a defence (refer to the Jensal Software case). But HMRC have repeatedly ignored this and in developing CEST (a tool to determine employment status), MOO is omitted completely. This has been challenged over the past few months, forcing HMRC to issue this paper. 
In the paper, HMRC state that “CEST does not explicitly look at MOO” and that “where work is provided and remuneration is paid we will assume that there is mutuality of obligation”. Crucially they also state “where a person is engaged in a series of contracts and there is no mutuality of obligation between each engagement this is irrelevant to mutuality of obligation”. 
Can I read more? 
Of course. Read the paper here
Read through our IR35 Hub Blog for details on the recent cases and latest news. 
Written by: 
Nicola J O'Sullivan -  
Effective Accounting 
Founder | Xero Champion | IR35 Expert 
Tagged as: CEST, IR35
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